iPhone Pricing Explained

One of the most-asked questions leading up to the July 11 launch of iPhone 3G has been “How much will current iPhone users pay to upgrade to a new phone?” We asked media representatives from AT&T to clarify the upgrade policy yesterday, and were told by Wes Warnock, “Eligibility for the upgrade discount typically involves a number of factors, including how long you have been in your current service agreement, your payment history (for example, prompt payment of bills), and more.”

Asked how that would relate to current iPhone users who can only have activated their phones at most a few days more than one year ago, Warnock would only allow, “In general, you are more likely to qualify [for the discount phone pricing] if you are at or near the end of your current service agreement and pay your wireless bills promptly.”

Because the iPhone 3G is being subsidized by AT&T, their standard upgrade pricing plan is in effect. This allows them to recover the cost of the subsidy over the two year life of the service plan you commit to when you buy the phone. Blogger M. Jackson Wilkinson at Jounce explains, “If you currently use a phone subsidized by AT&T, and you aren’t currently eligible for an upgrade (you aren’t nearing your contact’s two-year anniversary), you will need to pay the full, un-subsidized price for the iPhone 3G. In this case, that works out to either $199+200 or $299+200, hence the $399 and $499 prices.”

So, how does that affect first-gen iPhone users, whose phones weren’t subsidized by AT&T? Under the terms of AT&T’s upgrade policy, current iPhone users should be able to make a good case for being able to purchase the iPhone 3G at the fully subsidized price as long as they are willing to sign on for a new two year service contract.

Blogger Glenn Fleishman has additional details about iPhone pricing arcana at TidBITS

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Lonnie Lazar

Lonnie Lazar is a writer-musician-web designer-attorney. He writes about Apple for Cult of Mac and Mac|Life, and about VoIP and telecommunications for Voxilla. Follow Lonnie on Twitter @LonnieLazar, join the Cult of Mac on Facebook, and find Lonnie's photos on Flickr.

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